Using the Lifetime Gift Exemption Before it Expires

August 05, 2024
2 Min read

Being able to pass on wealth to family and loved ones is both a privilege and responsibility – a process Tolleson helps facilitate with excellence and care. With the current lifetime gift tax exemption scheduled to sunset on January 1, 2026, there is now a limited window of opportunity to take advantage of its favorable benefits.

Here’s what you need to know to make the most out of your estate giving and wealth transfers:

Key Details of the Lifetime Gift Exemption

Current Exemption Amounts (2024):

  • $13.61 million per individual
  • $27.22 million per couple

Expected Exemption Amounts (2025):

  • Around $14 million per individual
  • Around $28 million per couple

Post-Sunset Exemption (2026):

  • Approximately $7 million per individual
  • Approximately $14 million per couple

Why Act Now?

Utilizing the current lifetime gift exemption allows your assets to grow outside of your estate, which can significantly reduce the taxable estate and maximize wealth transfer. The cost of inaction could be substantial, as high-net-worth families could face significant estate tax liability once the exemption reverts to lower levels.

Tips for Maximizing This Opportunity

Start Planning Now

  • Avoid Last-Minute Rush: Estate planning attorneys will be extremely busy in 2025. Starting now allows you to fully leverage the current exemption levels and avoid potential pitfalls.
  • Review Existing Estate Plans: Ensure your documents align with your intentions and take into account the upcoming changes.

Consider Strategic Gifting and Trust Planning

  • Gifting Assets: Reduce your taxable estate by gifting assets to your beneficiaries or to trusts that will benefit them.
  • Trusts for Control and Protection: Trusts provide control over asset distribution, tax benefits, and asset protection.

Work with Your Family Office and Other Professionals

  • Expert Guidance: Estate planning and tax issues are complex. Coordination with your legal and tax advisors is crucial.
  • Family Communication: Communicate your estate plan and gifting strategy to your family members to ensure they understand your intentions and expectations.

Explore the Benefits of Texas Trusts

  • Dynasty Trusts: Texas laws now allow for dynasty trusts, which can last for generations and help you avoid estate taxes.
  • Favorable Legal Environment: Low fees, strong asset protection, and flexible provisions make Texas an attractive option for trusts.

The Importance of Proactive Planning

The lifetime gift exemption is a rare and valuable opportunity to transfer significant wealth tax-free. But it won’t last forever and waiting until late 2025 could mean missing out on these benefits due to the high demand for estate planning services.

By taking proactive steps now, you can secure your family’s financial future and legacy. Reach out to the Tolleson team today for further discussion and assistance. We are here to support you through this critical planning period.

Disclosures: Tolleson Wealth Management is not a CPA firm. This should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

More News